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Research Activities, January 2012, No. 377

Bundling payments for all related care within 30 days after an initial hospitalization, a cost-saving mechanism included in the recent Affordable Care Act, can reduce the cost of treatment and decrease readmissions for heart failure (HF), concludes a new study. This is good news, since HF is the most common reason for hospitalization among the elderly in the United States.

Eric D. Peterson, M.D., M.P.H., and his colleagues at the Duke Clinical Research Institute in Durham, N.C., analyzed the impact of bundling payments for Medicare beneficiaries with HF for 30 days (proposed by the Center for Medicare & Medicaid Services to begin in 2013) or 180 days after hospitalization. With a known 30-day readmission rate of 22.9 percent (median inpatient cost of $9,923 per readmitted patient) and a 180-day readmission rate of 54.1 percent (median cost of $13,463 per readmitted patient), the researchers found that break-even cost for a 30-day disease management (DM) program that reduced readmissions by 21 percent was $477, or $1,530 for an 180-day DM program.

Dr. Peterson and his colleagues noted that a small number of expensive cases skewed the distribution of 30-day costs for readmitted patients, resulting in an average cost of $17,122. If this was used as the bundled payment, four out of five DM programs that underwent randomized trials produced cost savings, ranging from $96�$875 per patient, while the fifth produced an additional cost of $52 per patient. The researchers concluded that if Medicare increased the bundling payments to 180 days, DM programs would be expected to yield even greater savings. Their findings were based on a decision model to assess the cost savings potential of enhanced DM care versus routine care. The likelihood of readmission of patients within 30 or 180 days was taken from previous analyses of a national sample of Medicare beneficiaries hospitalized for HF, and the costs of five DM programs came from published studies.

The researchers used cost data for all Medicare beneficiaries hospitalized for HF between January 2001 and December 2004. The study was funded in part by the Agency for Healthcare Research and Quality (HS16964).